The timeless and ancient currencies of gold and silver remain the two most popular metals to own and trade. These highly valuable commodities are widely popular among traders in a variety of forms, such as bullion and coins, along with online ownership. Most reputable CFD brokers offer online metal trading facilities, and this form is currently the most common. Some prefer gold and silver for their high values, while others believe in the idea of currency systems one day returning to these commodities. Whatever the attraction, they are appealing choices for traders globally.
The price trends of gold and silver
Regardless of the traditional connotations of these commodities, they should be traded like any other financial instrument, with a focus on price action and how it is influenced. Gold and silver are most often priced in US dollars, but the Euro is also used with some brokers. As a result, it is vital to monitor price action in US dollars as this forms the basis of price movement.
Because gold and silver move by larger amounts on average than forex currency pairs do, they cause larger fluctuations. While small fluctuations might make the market less volatile, it does increase the chances of a pair reverting back to a lower price. An example of this can be seen in the fact that gold prices increase as much as 70% in a year and silver by as much as 200%. Forex price increases are menial, with only a 30% average annual increase. The benefit comes from the potential for your commodity to become far more valuable than a forex currency pair would.
Methods of trading gold and silver
Trading according to price movement over as long as six months is usually the most profitable approach for gold and silver. However, a variety of strategies prove effective when trading these metals. One of these trading strategies is to follow market trends and work according to the resulting data. An uptrend that causes the price to reach new highs for the last several months naturally makes for prime buying time. You can also use the volatility to your advantage while still putting protective stops in place. Gold and silver have been seen to benefit most from strategies that put the necessary steps in place and then let the market do the rest of the work. Nevertheless, each technique and method should be thoroughly researched and tested to produce the best outcomes.
Choosing between the two metals
If you are interested in trading precious metals, your biggest confusion is probably how to go about deciding which one to trade. It’s quite clear that most traders opt for gold, but this does not necessarily mean that’s what you should do. In recent years, silver has risen to the top, with larger price movement and more opportunities. This might be because of the preference for gold, but broker fees also play a significant role. When comparing the commissions and spreads between gold and silver, gold incurs higher charges than silver does.
Although the initial venture to trade in gold or silver might cost more than that of forex trading, the long-term benefits are greater, particularly when considering the sizeable price movements. A more diverse approach is to trade both of these metals rather than choosing between the two. Because they move in similar directions simultaneously, they can be mutually beneficial.
Forex might be the market of the moment, but gold and silver have been around for centuries and continue to make for successful investments. Whether you choose one or take on both, smart strategies can allow you to profit from these large fluctuations and rising price movements.